Changing regulation has enabled greater access to broader pool of potential investors for startups.
You can now put out marketing and advertising of your need to raise money in certain cases. Platforms like the ones we cover help you to raise money while complying with the laws. Now you can take your new or growing businesses and reach further than you ever have before.
Advice for Raising Capital from the Experts
- Y Combinator created a guide to Raising Money Online - Advice for Startups
- CrowdWise created an Academy to help entrepreneurs with raising funds on platforms as well as investors
- 7 Strategies to Consider in Raising Private Capital by WealthForge
Find a Lead Investor
- How to Hustle on AngelList by Brenda Baker - this can also be applied to most other platforms.
- Angel Funding Checklist, Cap table examples, pitch outline, cap table examples from 1x1
- 21 tips on how to raise online (AngelList focused) from Darmesh Shah and Ty Danco
- 7 tips for raising Raising Capital on AngelList by Seed Stage Capital
- 10 Crowdfunding Realities needed for success by Christopher Mirabile - consider rewards first
- Angel Investor Survey Results by Propel(x) our article on this research
- Investor focused reports
- List of Startup Accelerators - SeedDB
A team of researchers have identified key elements to reaching a funding goal on equity-based crowdfunding platforms, using empirical evidence from the Australian Small Scale Offerings Board (ASSOB). Gerrit Ahlers, Douglas Cumming, Christina Günther and Denis Schweizer wrote the paper "Signaling in Equity Crowdfunding," identifying several critical success factors, which include:
- The number of board members;
- The level of education (measured by MBAs) of the board and management, and their network;
- Planned exit, whether it be an IPO, trade sale, leveraged buyout or reverse takeover;
- Financial projections, or a disclaimer — a written reason for not stating projections;
- Length of time in business;
- Personal wealth invested;
- Percent of company they are willing to give up or amount of equity offered.
An entrepreneur who successfully raised money on RockThePost, Shahab Kaviani, CEO of CoFoundersLab, shared tips in the Washington Post. Below are his points I feel are most important:
- Zero in on who you believe can be the lead investor;
- Be willing to travel to investors;
- Send updates on committed investments;
- Get feedback from investors;
- Exude confidence.
"Do you really want dumb money?" Barry Schuler, former CEO of America Online, was quoted posing this question in Forbes. There will be varying levels of commitment and intelligence in all sources of capital, but I argue that crowdfunding democratizes finance and brings together collective wisdom. That said, when considering the crowdfunding route, there are some issues to be aware of:
- Reporting burden;
- Time spent performing investor relations;
- Bad Actor requirements (CrowdCheck now offers a tool to ensure you comply)
- Future rounds of financing and venture capital models.
This innovation will help business creation and job growth, as well as disrupt financial markets. I hope these suggestions help those looking for resources to raise the necessary capital to build inspirational new companies.
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